By Nikki Baird, Managing Partner
January 5, 2010
It's very tempting, especially given all of the rumblings I'm hearing around mobile, to try to declare that 2010 will be the year of the mobile consumer. As we are all prodded to make proclamations about what the next year will be like, that one seems to make the most sense. However, I think 2010 will see the real beginning of something bigger. Something in which mobile will play a role, but not the only role, and that is "transparent retailing."
By "transparent" I mean that retailers will have to provide consumers with more access, at a more granular level, to more information about their operations and how consumers fit into those operations. It might be as simple as providing consumers with searchable, analyzable purchase history online, or as complex as providing the carbon footprint of products or processes. It might come from the mobile channel, through price or availability comparisons, or from the online channel around product reviews or ratings.
There are three trends at play that will converge in 2010, I believe, that will force retailers into more transparent retailing:
1. The pursuit of green. Not just "green" as in dollars, but the pursuit of cost savings via sustainability initiatives. Consumers want to know what retailers and manufacturers are doing to build more sustainable practices and products. Brands have learned that it's perfectly fine to pursue these initiatives internally without making a big deal about it, but as soon as you start publicizing it, you better bring it all to the table - the good, the bad, and the ugly, right along with what you're going to do about it (or why you can't do much about it, if that's the case). As soon as you start talking to consumers about what you're doing, you need to be prepared for full disclosure, lest someone dig something up or call something out, and the legitimacy of your efforts is undermined. It requires an as-yet-to-be-determined level of transparency into operations, and increasingly into the operations of trading partners.
2. Supply chain visibility. Speaking of trading partners, one of the highest areas of interest coming out of 2009, according to RSR's research, is supply chain visibility. Retailers need to - and desperately want to - have better visibility into where inventory is in the supply chain (increasingly all the way into the channels, not just upstream), and better visibility into how each movement in the supply chain contributes to the cost of the product. When you know where an item it is, and how much it costs to get it where it needs to be, retailers can make much more intelligent supply chain decisions. When you couple that capability with not just demand-sensing but demand-shaping capabilities thanks to price optimization, now you have a level of granularity and control that is unprecedented in retail. We won't get this in 2010, but the path to it will lead to much greater product granularity in the next year.
3. Greater use of customer data. Of all of the investments that were made or stopped in 2009 while everyone sat out the economic environment, one initiative that was not only continued, but in many cases the projects were accelerated, was around customer insights. Retailers have long been pursuing customer centricity initiatives, but in 2008-09, the importance of these initiatives came home with a vengeance: in an economic singularity, demand forecasts are near-useless. But customer insights, and advance insights into shifting customer behavior, became priceless. As consumers altered their purchase habits, retailers needed to be on top of any hint of defection behavior. In 2010, retailers are still struggling to understand the "new" consumer, and to convince abandoners to come back.
Take all three of these trends and wrap them around customer expectations: as a consumer, I expect to have access to the same capabilities and information in one channel that I can get from another. I expect to be able to compare prices, products, reviews, availability, and more, not just across channels but across retailers. I expect to be able to understand how the products you sell impact my life and my world, and increasingly I expect that about low consideration products, not just the high-value items.
The retailers that enable this behavior, and meet these expectations - in fact, the retailers that exceed these expectations and truly strive to make their customers' lives better, easier, simpler, or even just filled with slightly more free time than before, will be the retail winners of 2010. These are the retailers that take an internal look at themselves, and display what they've learned for all their customers to see - that perhaps even coopt their best customers in helping them solve problems or prioritize different types of transparency.
If you make your margin by exploiting some kind of information advantage over your customers - whether that's knowing the fair price when your customers don't, or product quality issues that you're not being up front about, or even whether you have more of an item available or not (or if your competitors do), I have a feeling the next year is going to be tough. And the next decade even tougher.
Welcome to the year of transparent retailing.
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